It shows a company’s ability to pay its suppliers and can be utilised in any financial statement analysis.Ī company’s goal should be to create enough revenue to pay off its accounts payable fast, but not so rapidly that it misses out on chances by not investing that money in other operations.
The accounts payable turnover ratio measures a company’s ability to pay suppliers and short-term debts efficiently.Ī useful activity ratio for gaining insight into a company’s finances is the accounts payable turnover ratio. Accounts payable are short-term debts owed to suppliers and creditors by a business.